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1/24/09

In a couple of pretty classless moves to try and affect the vote tomorrow, foreign press are getting in on the Whack-An-Evo game. Firstly CNN, which tried its very hardest to lay out the non-existent terrorist trail between Bolivia and Iran. CNN also wheeled out the usual biased, uninformed bullshit about the narcotrafficking in Bolivia. His Evoness himself said that "everyone knows what CNN's orientation is."

Secondly, El Pais interviewed racist leader the Santa Cruz thugs, Branko Marinkovic. Not one difficult question about his UJC hit-squad or a mention of how they terrorize and beat up indigenous locals. Nothing about the attempted coup or how he's refused to answer court orders to explain his role in last year's insurrection. All El Pais threw to the shit were softballs, but even then he couldn't help but show his non-democracy. At the end, Branko signs off with, "The government must understand that it can't govern against the will of half the country."

Now even if that "half the country" thing were true it would be a call to ignore a democratically elected administration, but this illusion of a country torn in half has long since been proven false. As seen in this post at the time of the recall referendum, the only place in the whole country with significant opposition majority is Santa Cruz, and then it's not even the region but the city we're talking about. It's like supposing a political spat between New York and the USA means "A Country Torn in Half".

But never, mind, because media can bleat all they like; tomorrow Evo wins by legal, decent, honest and truthful democratic one-person-one-vote means. So screw the racist scumbags and the lapdog media they ride in on.

Brazilian miner Vale's (NYSE: RIO) iron ore output in 2008 slipped 0.5% from the previous year to 302Mt, the first time since 2000 the company's production has dropped.

"From 2001-07 iron ore output grew at an average annual rate of 13.4% as a consequence of productivity gains and large investments to increase capacity," Vale's annual production report said, adding that the company shut down several mines in Minas Gerais state due to dwindling demand caused by the financial crisis yada yada continues here

So as the slump only really happened at the end of 2008 the note had caught my eye. "Hmmm...just how bad did it get?" thought your inquisitive numbers wonk, so off I trotted to the RIO website to check out the figures. Now this isn't looking at copper, or nickel or any of the other RIO products, just its core industry of iron ore production. Here's the chart.

Holy Moley, that's one helluva drop in the last quarter, especially when you remember that the cuts didn't even start until November, with the second wave of layoffs happening in the first week of December. Gawd help 1q09 and onwards. And even though Vale manged to beat the clock and raise capital at the right time in 2008, frankly I'd rather hold Osama Bin Laden's dick than RIO shares right now. I mean look at the 12 month chart:

For sure it had the waterfall drop just like all the others, but since November people have actually been buying the stock. So take a look at the five year chart and see where the company can go when things get tougher....and they're going to get tougher.

Otto's got three great freebies to offer you today. The first one is a straight download with no catches. The second and third are on request basis for USA and Canada readers and if you get your free report I get a small commish (so get yourself one, support IKN and get smart at the same time, ok?).

Get your brochure "What is ISO-9000 and Why Should I Care?"(especially useful for mining industry readers) by clicking right here.

Request your copy of "Enterprise Asset Management: Maximizing Return on Assets (RoA) and Emerging Trends", an Aberdeen Group report which surveyed more than 160 manufacturing executives to understand the strategies and business capabilities adopted to maximize Return on Assets and reduce risk from failure of critical assets (which is exactly what businesses need to know in recessionary times, so get wise to this and shine like the stars that you are at the office Monday morning, dudettes and dudes).

1/23/09

For example, it can teach us the difference between greatness and mediocrity.

Take, for example, Terry Butcher and Diego Maradona. Back in 1986 in Mexico, Butcher was the defender Maradona beat not once but twice while scoring the greatest ever goal in a World Cup Final (and quite possibly the greatest goal ever). He was also close witness to Maradona's first goal that day, the infamous "Hand of God".

Here's what the two players have to say about each other 22 years later. Spot the difference between the leader and the pack.

Terry Butcher:"The Hand of God was a strange thing. I was angrier about the second goal because of the way he beat me. He beat the other players just once but he beat me twice....Maradona's a cheat. I'll never let it go. I still hate him with a passion. Little bastard."

This link to Econometrica. This is because these smart people have just released their first 2009 quarterly Argentina macroeconomics review and you can get your copy of this extremely useful PDF for free. It is in Spanish, but as nearly all the info is in chart form even a basic understanding is enough. Excellent source material on the country and highly recommended.

This link to the New York Times. This is because Simon Rosemary has actually gone and done a wonderful thing; he's actually gone and done written us all a balanced report on Venezuelan issues. Yup, I gone done read it thru twice to check, so go do see for yourself who this Posadas creep is. Hat tip to the magnificent Borev bitches.

A second look around the market today? Yeah, why not. It's Friday after all.

Queenston Mining (QMI.to) up 10% at $3.15. This isn't my geographical area, I know absolutely nothing about the company or the stock. However two things to mention. Firstly, it's a name that passed my desk today as one of the many tips, hints, leads etc that goes around. This isn't anything new and I don't think there's much to read into it. Just an example of the rumourmill in operation. In fact i wouldn't have even mentioned it here if it weren't for the second reason for posting, namely the wonderful but wonderful name of its main project, Upper Beaver. So if you fancy getting upper beaver this week, have a closer look :-)

".... the TRY news isn't really understood by many, but the costs savings in FY09 will be just as important as the cash flow. You saw that TRY has hedged Sandstone Fy09 production at A$900 via puts I presume? Smart thinking imho.

Another aspect of this is the way they care about workforce. A clear message from the company is that they're just as happy about extending Sandstone to keep 60 people in jobs as they are about the revenues. That's truly my kind of mining company, an attitude that pays LT dividends to those on board.

Petquilla Minerals (PTQ.to) down 5% at $0.38. On a day that gold jumps 5%, too. What does that tell you about the quality (or lack of) offered by this dog? The quicker it goes bankrupt the better everyone. This miner gives mining a bad name; isn't it about time the mining community opened up a bit and pointed its fingers at the bad apples amongst them?

Cosan (CZZ) down 4% at $2.95. This is the part of my portfolio that sucks today. There's always one, isn't there? Check out this Bloomie report for a Brazil commods sector overview that gives (meat least) something to hang onto while swallowing market action.

Jaguar Mining (JAG) up 8% at U$5.70. I've just taken profits. A big thank you to the person that just bought my shares and I hope you're right and you make a good profit from them. Chez Otto it's that simple equation again; Bear market + trading portfolio + nice ST win = take profits.

Greystar (GSL.to) up 12% at $2.58. That's 27% in two trading days and this thing is getting a lot of focus from people now. I've had mails from smart people saying the asset is a dog and won't be a takeover target. I've had mails from smart people who just know it's the next thing to be bought out by a big goldie and are buying accordingly. The only surprise is that these people bother writing. They seem to be under some impression that I know what I'm talking about and worth writing to....buncha weirdos if you ask me. Either that or I'm fazing more people than imagined possible ;-)

Dynasty Metals (DMM.to) up 7.8% at $4.44. You gotta know when to hold 'em and know when to fold 'em. This one you hold very very tight and don't let go. I just love the fact that 99% of the professional analysts and market watchers up North called Ecuador 100% wrong. I love you all, guys. It's been real. Let's do it again sometime, yeah?

Coastport Capital (CPP.v) UNCH at $0.04. On the subject of Ecuador, here's that little pennycrapper that's in the corner of my screen again. I still don't own and I still say it's a high risk play, but take a look at the latest insider trading action.

Jan 22/09

Jan 20/09

Sadler, Laurie Wayne

Direct Ownership

Common Shares

10 - Acquisition in the public market

120,000

$0.040

Jan 22/09

Jan 19/09

Sadler, Laurie Wayne

Direct Ownership

Common Shares

10 - Acquisition in the public market

120,000

$0.040

Jan 07/09

Dec 29/08

Sadler, Laurie Wayne

Direct Ownership

Common Shares

10 - Acquisition in the public market

459,000

$0.025

Innarestin', no?

On the subject of insider trading, let's redux on Greystar for a second. Have a look at George Milton's trading action recently and see if you can spot the problem here:

Filing Date

Transaction Date

Insider Name

Ownership Type

Securities

Nature of transaction

# or value acquired or disposed of

Unit Price

Jan 22/09

Nov 21/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

472,000

$0.620

Jan 22/09

Nov 19/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

5,000

$0.830

Jan 22/09

Nov 19/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

5,000

$0.800

Jan 22/09

Nov 19/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

5,000

$0.750

Dec 16/08

Dec 15/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

20,000

$1.060

Dec 16/08

Dec 10/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

13,000

$0.950

Dec 16/08

Dec 10/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

11,000

$0.940

Dec 16/08

Dec 09/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

5,000

$0.800

Dec 16/08

Dec 09/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

5,000

$0.780

Dec 16/08

Dec 09/08

Milton, George

Direct Ownership

Common Shares

10 - Acquisition in the public market

4,000

$0.790

Now for sure Milton has done well on these trades and kudos for him on that. But notice that top trade that was disclosed today where he bought 472,000 shares at $0.62. The transaction date was way before the others below, but this big big block was filed way after the others. Now that's just a little bit naughty, GeorgieBoy. What's the story here?

After melding, fusing and gobbling up Sherwood Copper late last year, the newly grown Capstone Mining (CS.to) published a very interesting PR last night. Here's the link so go look for yourself, and you need to look because there's plenty of info about how the company has lightened its debt burden and moved the financial shells around.

This quick post is more of a headsup about the details of the hedge book, pasted below. Lots of lines and numbers and things as per normal with these tables, but the thing to take away is that CS.to is going to sell around 40% of its 2009 copper production at around U$2.61/lb. It's also got about 30% hedged at U$2.38/lb for 2010.

The whole hedge book is worth U$115m if marked to market at current prices, with the book heavily weighted to the next three years. Of if you like, you can consider that if copper averages $1.50/lb in 2009, CS.to will sell its produce at a total average of U$1.94/lb thanks to this hedge. And as the company expects cash cost to come in at around $1.45 to $1.50/lb (and I guess that's dropping too thanks to industry price cuts) CS.to has found itself in a very good place to ride out the worst of this storm.

I'm telling you now that there's a lot more to understand about this company than my quick post shows you. The financials aren't straightforward and would take plenty more to explain even semi-properly. But with that said, Otto says there are plenty worse ways to put copper exposure into your portfolio, if that's what takes your fancy. I don't own at the moment but did reco the stock recently at various prices under $0.90 (so bite me Casey and your "nice company but not going anywhere" call at the same time last month). DYODD dude, don't waste your money at Doug's house of mediocrity.

As far as gold exposure goes, Otto got TRY.to, DMM.to and JAG in the trading portfolio. I also have a small short hedge in an un-named gold miner. However largest position is still cash and it's likely to stay that way for some time. DYODD dude.

Today's action in local miners has an undercurrent of "who's going to buy who" about it. Credit Suisse came out with a note this morning adding its own spin on the guessing game and saying that Kinross (KGC) might even gobble up Yamana (AUY). Well Otto dunno 'bout dat one dude, but I had a good stare at possibles last night and as mentioned previously I'm sticking with JAG as my "most likely to" for 2009.

Jaguar Mining (JAG) up 7% at U$5.17. Yep, it's looks like the market feels the same way, too. This might even become a bidding war with AUY and KGC slugging it out, but AUY is still the best fit imho. Anyhoo, your profits-driven Otto is happy about the pop today.

Greystar Mining (GSL.to) up 18% at $2.40. As quickly summized in the post before the bell today, this thing looked cheap at two loonies. Still looks cheap now, all things considered, but chasing after a price isn't my idea of solid trading tactics. If I buy it'll be lower than here.

Fortuna Silver (FVI.v) down 9% at $0.82. I got a mail last night asking where a decent buyback point would be. To be honest I don't really know. Buying back is more seat-of-pants and less charts and lines with me. Why don't you shoot a mail to Gary BiiWii and ask the TA guy? At least you'd be asking someone who's worth listening to about charts instead of the normal knuckledraggers that pass themselves off as experts. Anyway, I don't really know about a particular buyback spot for FVI.v right now, but I'd think that it wouldn't be before we get a drop and rebound in silver (gold). Personally I'm not in any hurry to buy anything else right now; the cash cushion will stay plump Chez Otto and the gold exposure I have from the other stocks is enough for me now.

Gold Hawk Resources (CGK.v) down 20% at $0.02. With the debt payment deadline of January 29th now looming, it needs good news and it needs it soon. I'm rooting for these guys cos they treat the locals well.

Happy anniversary Meester President, as Doctor Evo Morales celebrates three years in charge of Bolivia today. And suck as it must for the rabid fascist opposition to even consider admitting it, the country has done very well under Evo for the past three years, attempted coup d'etats by the asshole racist scum notwithstanding.

And remember, we're now just four days away from Sunday's big constitutional referendum vote where Evo is bound to whip all tushes. I'm marking down my forecast for Sunday at 68% "yes". Anyone want to play the $10 for charity betting game this time?

Over at Caracas Chronicles, Quico has today continued his diatribe against the Venezuelan economic policies concerning international currency reserves (IKN picked up on his politically charged but generally excellent post of a couple days ago right here). But today Quico has obviously decided to "forget" some pretty basic economics in his rush to condemn the Vzla gov't and its economics, basically because he's the kind of partisan analyst that hates Chávez so much he could never say anything remotely in favour of the guy. As I said the other day so be it, I'm not my brother's keeper etc, but he does himself a disservice by his error of omission.

"...Most irksomely, the press release parrots the meaningless concept of an "optimal level of foreign currency reserves", which immediately flags it as a work of rank hackistry. For the Nth time, calling any absolute level of reserves "optimal" is simply meaningless. It's a bit like confidently declaring that 2 kg. is the "Optimal Level of Harina Pan reserves.".."

That, unfortunately for Quico, is simply untrue. In serious economics circles there is a clearly defined concept of optimum foreign currency reserves. I'm not going to get all wonky on you here (those so inclined to dust dry economics can run the names "Garcia and Soto" though Google with keywords like 'currency', 'GDP', 'reserves' etc and have a nice afternoon) but to hit it in simplified bullet points:

It actually costs a country money to hold currency reserves. This cost is usually defined as local interest rates minus world benchmark interest rates (usually LIBOR). Even in these rocky times that equation is not to be ignored. This cost is more akin to an opportunity cost than real "gotta pay a bill" cost....but a cost is a cost. Period.

There is always debate about these things, but a consensus among economists revolves around having 10% of a country's GDP available in the reserves to avoid sudden stop shocks etc.

In the case of Venezuela, the current U$42Bn really is too much according to these accepted parameters. In fact the U$30Bn that will be left once Chávez extracts his $12Bn soon is as close to optimum as possible.

Or put another way, the cost to Venezuela of holding that extra U$12Bn in reserves would be around U$1Bn annually. That's a significant amount of moolah, folks.

In other words, yer man Quico over there at Caracas Chronicles is telling half-truths and preaching just what the converted want to hear instead of being intellectually rigorous and telling the whole truth. The problem in Venezuela is NOT, repeat NOT the size or non-size of its international currency reserves. The problem in Venezuela (in this case at least) in the amount of money being printed by the Central Bank aka M2. If Quico stuck to that he'd have a decent argument, but until then he's just another anti-Chávez ranter and can be ignored. A pity, really.

That was twice too often, frankly. I've visited some unlikely places in my days, but La Rinconada is my idea of hell on earth. Read the NatGeo's article yourself as it gives a fair overview of the place IMHO. It's also a non-judgmental report that tells things as it is and doesn't try to preach, which is something to be appreciated in this day and age of "you gotta think this way" BS journalism. I'd only add that it's a pity the journalist didn't talk about Rinconada backstreet where 15 year old prostitutes are available in the evening, U$5 a turn. The saddest sight I've ever seen.

Anyway, today's news from La Rinconada is that a tunnel collapsed yesterday and five miners have been killed. So far only one body has been retrieved from the tunnel in question. Anyone who knows the place won't be surprised. Here's the link to the Spanish language report and that will have to suffice, because there is zero chance that this news will ever make it to Kitco, Mineweb, Northern Miner or other mining news clearance houses. Not quoted companies, you see. Not important, you see. Think about it.

With the release of its new 43-101 compliant technical report on its very large Angostura project in NE Colombia (whch you too can get by clicking right here), the round-up-the-numbers quickest-eye view possible of Greystar (GSL.to) stacks up as follows:

DYODD dude, and the bare numbers above do not do juctice to the real reading you need to do to get a proper handle on the company, but the above..to me at least.....looks like an interesting large gold deposit at low prices. I do not own but that might change soon.

Meanwhile, why should Kinross want to raise another U$360m when they have 500 large ones at bank already.........?

1/21/09

The two assembly members that arrived late for the debateafter driving 84km in first gear.

Even when your President is in your face and screaming that there isn't a single day to lose, old habits die hard.

Today Ecuador's Congresillo was supposed to pass the tiny veto/adaption that Studmuffin made to the mining law so that it could get moving, signed in and made the working law. However only 38 assembly members turned up for the debate. Thus quorum wasn't achieved and the whole thing is now postponed til Monday. The absent parliament members from the ruling PAIS party blamed their absence on internal party elections, but assembly chief Fernando Cordero (that's not him below) was pretty miffed all the same and has laid a U$180 fine on all the lazyasses that didn't bother to come to play which was pretty uncool and breadhead of him, dontcha think?

I just feel like tooting my own horn today. Attempts at humility will be resumed as soon as possible. Thank you for your patience.

Click to enlarge

The posts mentioned in the chart above can be found here and here. In fact, the headsup to think about taking FVI.v profits actually started on January 8th in this post. Taking profits is important in a bear market, period. So is filtering out retail investment noise such as the "all advantages and let's not talk about the negatives" kind of article that Proactive Investors offered up to its flock about Fortuna in the last few days.

DYODD, dude. I really mean it. Do YOUR OWN Due Diligence. Get it? It's YOUR money.

So run this by me again, yeah? When 29 people are tortured and held illegally by police and security forces for three days, including one person shot dead, the NYT's Latin American asshole reporter-in-chief doesn't think it newsworthy and so doesn't bother covering it. Because it's Peru. And because Peru is the USA's new-best-friend. And we can't go round upsetting foreign investors, can we? But when four Venezuelan students are arrested by police for protests that include throwing molotov cocktails hither and thither it's immediate front page material of the highest "let's forget the details of what the attackers were doing and only talk about the tear gas" order.

Sounds perfectly logical to me. By the way, El Chiguire Bipolar reports Vzla far better than that twat Romero who prefers to get lawyers molesting bloggers rather than do some actual work. Case in point here, and another is that the NYT has to rely on AP for stories these days. More FruityRumPunch, Rosemary?

Petaquilla Minerals (PTQ.to) down 9.5% at $0.38, and a volume that not even CEO Fifer can mop up by himself. Sad, isn't it?

Monterrico Metals (MNA.L) down 6% at £0.54, also down 20% in just four trading days (as it was £0.70 or even higher). Another case of "oh my bleeding heart".

Dynasty Metals down 1.2% at $4.10. And on the seventh day he rested.

Kinross (KGC) down 6.4% at U$17.18. I mentioned being suspicious about the way KGC had been pumped hard since before Xmas to a few e-mail pals. When all The Houses get together to promo a stock like this there's something a-brewing. Sure enough we get the denouement aujourd'hui; Kinross is raising U$360.5m by providing a lucky world with 20.9m new shares.

Troy Resources (TRY.to) down 3.5% at $0.82. Humph...the only move affecting my own portfolio that is slightly annoying, esp after the good bounce and volume shown in Australia last night. Just 26k shares traded so far in Canada....meagre crumbs. Still, plenty of patience for this thing, as the fundies rock. At these prices TRY.to can be summed up in five words; my top pick for 2009.

At first glance, the chart below of Colombia's manufacturing industry growth doesn't look too bad, does it? What we see is from 2003 to November 2008 the line zigs and zags a bit, but generally moves in the right direction.

Click to enlarge

Well, as Lester Burnham's Post-It said in American Beauty, 'LOOK CLOSER', because the numbers for November released yesterday by Colombia's official stats people DANE totally but totally and horribly suck.

Traditionally, Colombia's best performing month is November, true for all indexed results on the chart. In 2003 (and to get wonky on you) November topped the year with 132.17, in 2004 November topped with 151.08, in 2005 November topped with 154.83, in 2006 November topped with 187.54, in 2007 November topped with 201.61. BUT, 2008 November has seen a significant slump to an indexed 188.50. As Reuters reports here (Spanish language), the Year-over-Year drop is 13.3%.... yowzers. This is serious caca, people. Colombia isn't just slipping into recession, it's diving in head-first. Retail sales were also reported down 2.95% in the YoY figures yesterday. Extremely smelly.

To round off the bad news, the last snippet of the Reuters report also mentions how local bizpeople are moaning that interest rates are still too high and restrictive to operations. This is a bellweather to how Colombia's currency is about to perform against the dollar (i.e look out below). In fact, it's pretty indicative of how all local currencies are about to get reamed versus the greenback in the months to come. I was asked a couple of days ago by a Peruvian friend whether it would be better holding Nuevos Soles or US Dollars going forward. It took me about a millisecond to answer "dollars". As a final, wider thought, maybe the rabid goldbugs who constantly predict the imminent demise of the US dollar should remind themselves occasionally about wider world issues. Mind you, it's doubtful they even own passports.

Well, it only took three and a half years for the Peruvian gov't to start caring about the case, but now at long last wheels are in motion. The power of photography, no?

Last night RPP radio reported that the Majaz torture case would be officially investigated by Peru's Congress. This is the full-on public enquiry method in Peru and although it might not move very fast it will cover all the ground and dig out all the details as it goes along, including the names and addresses of the National Police and Monterrico Metals security guards and bosses.

Intriguingly, the congresswoman in charge of the case, Marisol Espinoza, also mentioned last night that if necessary the case would eventually be forwarded to the International Commission for Human Rights. Oh, my, I'd love to see that arrogant prig Bristow up before the serious world beaks answering difficult questions, wouldn't you?

And as for you traders who care more about making a buck, a short in MNA.L would help your wallet and the greater good of humanity. The quicker this company goes bankrupt the better. Stick a fork in this pig cos she's done to a turn.

Now guess which one of the two was trumpeted this week by the everso everso balanced and never biased Bloomberg Latin America as having "A Seven Month High" in ratings? And guess which one got zero coverage of his record approval rating?

1/20/09

One of the common complaints from Evo Morales supporters is of media bias inside Bolivia. This complaint is made by the rank-and-file and the President himself (an Evo mouthful recently got media types so miffed they refused to cover Presidential affairs for a period). So it does beg the question as to whether Evo has a point or whether he's being overly sensitive about the normal cut-and-thrust of political doings.

So as IKN is the kind of place that tries to treat its readers as thinking, reasoning dudettes and dudes,

YOU BE THE JUDGE!

Here are a few examples of the type of news editorial spoken on the air at the very popular local Radio Oriental, Santa Cruz. The speaker was Luis Arturo Mendivil, who is a local rich, landed lawyer and is also the owner of the radio station in question. This translation comes to you via Reporters Without Borders and the headsup was given to your humble correspondent by this post in the blog Ten Percent(a site friend linked on the right). My thanks to both sites.

Finally, please note the glossary of terms at the bottom that explains such local expressions and terms as "colla", "stone llama freak" etc. Let's see if you can see a hint of bias, hatred, calls to violence, or racism in the texts that follow, but just to help you along a tad I've picked out a few choice phrases in bold type.

“How much longer are we going to put up with the attacks of these evil colla sons of bitches? I am not one of those sissies who hide behind a false ‘Bolivianism.’ As a result of the criminal Upper Peru centralism, the pacos have invaded us with the aim of robbing us, murdering us, extorting things from us and plunging us into all-out violent crime. All these damned collas who laugh while destroying the productive home, while the other idiots do not react. Worst of all, we are just giving in to our murderers and vultures. You are better off dealing with a criminal, because you can always convince a criminal. But dealing with colla pacos who come in order to hate us, who come ready to hate us, can we put up with this much longer?

Let’s form our own police force, yes, let’s have a Santa Cruz police force so that these evil collas stop attacking us, extorting things from us and murdering us. When you see a colla, you see a murderer, a criminal, a piece of offal. That’s what you have when you see a paco. How can you talk about public safety with pacos around? There are 10 or 15 of them hidden at a street corner? Why? To rob us, to extort things from us. If I die tomorrow, I will no longer be there to denounce this gigantic mafia we have. Because there is no such thing as a paco with dignity, a paco with any kind of worth, a paco who wants to work. Why don’t we react? You will see what they do to us on 1 May. The pacos who have come to Santa Cruz are not here for law and order, they have come in order to kill, rob and commit crimes. They are here to stick it to us in the backside. Good night and have a good meal [sic].”

Second editorial, 11 June 2008:

“I am not proud of being a Bolivian, as the collas would say. I am proud of being a camba, of being a Santa Cruz man to the core. I want to be an Amazonian. I want to take advantage of this piece of Latin America without having to keep the company of these ignorant brutes, these animals in human form. I will never stop calling them that, these drugged, alcoholic maniacs who yesterday or the day before tried to demonstrate their ferocity in La Paz like poor animals. When a human being takes the form of a two-legged animal, when a human being loses his rationality, when we listen to these brutes and imbeciles who govern us, each day we lose a bit, or a lot of what we aspire to become.

I was listening to this imbecile, this ignorant cretin who represents us on the international stage, I was listening to him say he was not satisfied with the ambassador’s statement but would consult lawyers. Obviously, it is a man with knowledge of international law who can maintain relations between peoples, and not this stupid donkey, this animal, this stone llama freak. We must develop every possible mechanism to oppose this proposed referendum which makes no sense, which is just a sexual infatuation between the government and Tuto Quiroga [former president and current head of Podemos, the main opposition party, who is regarded as traitor by the most radical supporters of autonomy]. We won’t let ourselves be screwed by these sell-outs. They are all in the same corner as this crazy government that wants to make us submit to a socialist-model economy that has failed all over the world.

We must forge a broad social pact to preserve and extend our autonomy, as these imbeciles are trying to make it fail and to lead us into chaos. I am becoming steadily more convinced that those who govern us want our blood. My concern, and I appeal to our leaders about this, is that these stone llama freaks should stop thinking they can impose their vision of government on us. The referendum will lead us to a dangerous extreme.

This populism without content, vision or ideological basis that rules us is a source of uncertainty. We are beginning to feel the effects of the blockades, including inflation. The departmental prefect made proposals today. The response he will get tomorrow will be insults and blockades. We think the prefect’s proposal must be improved. Santa Cruz cannot and must not lower its guard towards this government. The war continues and the collas won’t stop until they see blood flow. They won’t stop until they have destroyed the pro-autonomy process. They won’t be happy until they have eliminated our system of production. That is why we must halt this cholo mentality in Bolivia.”

Third editorial, 18 June 2008

“We are above all Santa Cruz supporters, fanatically camba and nothing, absolutely nothing, can make me proud of being Bolivian. I want to pay tribute to these men and women who put their lives at risk in order to ensure that our rights are respected. The cholo, thieving, drug-trafficking bourgeoisie of Upper Peru, nowadays with Chávez’s trollops in their wake and manipulated from the upper levels of Illimani, know no limits in their hate for the people of Santa Cruz. It is a good thing we have a strong Unión Juvenil Cruceñista [an extreme right-wing group based in Santa Cruz that supports autonomy; implicated in attacks on state media].

We need a strong youth to deal with the blockades and take charge of defending the people everywhere, and not these damned collas who are just a bunch of nonentities, delinquents and perverts. The guy running the government is a pervert too, he is incapable of doing the job. The Unión Juvenil Cruceñista is attacked, insulted and vilified here. Damn you, those of you who think that our youth here is shit. Our youth is full of nobility, unlike that race of collas who just want to suck the state’s tit, who just want cocaine, who just want to rob. That’s the difference between the camba and the colla. We are sick of hearing this gang of scruffy collas, these stone llama freaks, who want to get rid of the Unión Juvenil Cruceñista. They cannot do anything without insulting us, these sons of bitches, who do anything to discredit the Unión Juvenil Cruceñista.

Any of these sick colla bastards can insult the Santa Cruz youth. I ask myself: where are the media, which are always ready to denounce a scandal? What does the press say? Where the human rights people. Where are these lousy collas? Where is the ombudsman? They all need to say something. When the collas come out with their machine guns, organise ambushes, kill, rob and spread terror and blood, is this a work of art that must be applauded? We are going to defend everything to do with Santa Cruz.

"Colla" or "cholo": inhabitant of the highlands of western Bolivia. Most “collas” belong to the Aymara or Quechua indigenous groups. “Upper Peru” was Bolivia’s name when the region was under Spanish colonial rule. Present-day Peru was called “Lower Peru.”

"Camba": traditionally, the peasant of the eastern lowlands. Nowadays it is used for all the inhabitants of eastern Bolivia, especially Santa Cruz.

"Paco": a common and somewhat vulgar term in Bolivia for a policeman of the lowest rank. As he is paid so little, it is always assumed he will try to extort money from the public.

"Stone llama freaks": Partly because the complexion of many Aymaras and Quechuas has a coppery tone, racists often claim that they look like llamas (the Andean domestic animal) or look as if they were made of stone, or both at the same time.

In my ongoing efforts to popularize the late Douglas Adams' stunningly perceptive concept of Bistromatics, my idea was to write a really long and wonky post about the problems Chávez&Co are unleashing upon themselves by tapping the country's international currency reserves to the tune of $12Bn, the money transfer coming up this month.

However there is good news: I've just been given a headsup that Quico over at Caracas Chronicles has just beaten me to it. And now the GREAT news; his post is much easier to understand on the subject than mine would have been, so please go over and have a look for yourself. Here's the link. But before I go, here are a couple of comments on his generally excellent article.

1) Quico is a raging Chávez hater and carries that message in everything he writes. So be it, I'm not my brother's keeper etc.

2) However, all the numbers and charts and stats he uses are, in my view at least, spot on. So Otto sez filter out the dogma, forget the politics on offer and concentrate on the fact that the numbers show Chávez is heading for an economic SNAFU. After all, Venezuela has always been totally addicted to oil and the same problems have shown themselves in any administration that lived through an oil price slump; this isn't something unique to Señor RedShirt.

3) I'd like to add this chart (which I cooked up yesterday) as this is just about the only chart relationship Quico didn't have that I would have used. It shows the Reserves-over-M2 rate compared to the real parallel exchange rate in Venezuela, January 2008 to date. It adds that final light blue spike to show where the reserves ratio predicts the parallel rate once the $12Bn is taken from Central Bank reserves.

You'll note that over the longer term the blue line has acted as a sort of anchor for the more volatile parallel rate. It's not an exact fit though, as other things affect the parallel market that live outside the world of theoretical economics and in the world of reality. For example in the April 2008 to July 2008 period the parallel rate was suppressed by bonds emissions that offered virtual free money for those lucky enough to be on board. Then when it became clear in August that there would be no more bonds delivered to market by Venezuela, the parallel popped back up (and overshot somewhat in my opinion). Then in the last few weeks we've seen extra pressure on the VEF due precisely to the recently announced policy of central bank reserves withdrawal. As the move was widely expected, the speculative pressure was already on the parallel VEF.

Really, this chart is just another way of presenting Quico's chart of the comparison to inflation data, but as the chart here is more pure monetary in nature it might be a better way to play. You be the judge. Anyway, all the above doesn't really stand on its own. To get the full idea of what's going on, check out Quico's really top class post. Here's the link again, just in case. now for that Bistromatics excerpt again.

Bistromatics was created by Douglas Adams in the "Hitch Hikers Guide to the Galaxy" series. For those unacquainted with this important mathematical theory, here is the definition of the term as culled from the book:

The Bistromatics Drive is a wonderful new method of crossing vast interstellar distances without all that dangerous mucking about with Improbability Factors. Bistromatics Itself is simply a revolutionary new way of understanding the behaviour of numbers. Just as Einstein observed that time was not an absolute but depended on the observer’s movement in space, and that space was not an absolute but depended on the observer’s movement in time, so it is now realized that numbers are not absolute, but depend on the observer’s movement in restaurants.

The first nonabsolute number is the number of people for whom the table is reserved. This will vary during the course of the first three telephone calls to the restaurant, and then bear no apparent relation to the number of people who actually turn up, or to the number of people who subsequently join them after the show/match/party/gig, or to the number of people who leave when they see who else has turned up.

The second nonabsolute number is the given time of arrival, which is now known to be one of the most bizarre of mathematical concepts, a recipriversexcluson, a number whose existence can only be defined as being anything other than itself. In other words the given time of arrival is the one moment in time at which is impossible that any member of the party will arrive. Reciproverexclusons now play a vital part in many branches of maths, including statistics and accountancy and also form the basic equations used to engineer the Somebody Else’s Problem field.

The third and most mysterious piece of nonabsoluteness of all lies in the relationship between the number of items on the check, the cost of each item, the number of people at the table and what they are each prepared to pay for.

Numbers written on restaurant checks within the confines of restaurants do not follow the same mathematical laws as numbers written on any other pieces of paper in any other parts of the Universe….

Dynasty Metals (DMM.to) up 4% at $4.14. It's all good. Holding and riding. FWIW My sights are set on $5.60. Get the cheapo report to find out more (though I'm happy to say that plenty of you have already).

Jaguar Mining (JAG) up 0.8% at U$4.92. I had a fair amount of feedback wanting to know why I think JAG is a good play, so let's shout it out. I don't have any special super-duper industry info or strong rumour or anything of the sort, but I do think that Yamana (AUY) will buy Jaguar Mining. Right fit, right country, right size, right price. It also fits with the recent AUY noises about having cash and not being afraid to use it. So that's my neck nicely stuck out; only time will tell now. Oh, I added a few more JAG today, too. Avg now at $4.70 or so.

Mercado Libre (MELI) down 20% at $12.25. I've sat on the sidelines and watched it go from 10 to nearly 20 and now back down to 12. Quite honestly I've been much happier about this stock since I gave up trying to trade it, as I've got a really crappy track record on trying to guess its future. MELI is currently suffering the constant bad news coming out of the S.Am retail sector in general and Brazil in particular.

Cosan (CZZ) down 8% at $3.14. I'm glad I lightened in the high 3s, but even the ones I held are still in the profit column. The Brazilian fearchatter this week is about weakness in the corp bonds market so CZZ is suffering as it has plenty exposure. I'm still watching that sugar futures chart and i'm still very relaxed about holding this one through. Supremely undervalued.

Gold Reserve (GRZ) down 2.8% at $1.05. The Canadian quoted stock (GRZ.to) is rebounding from a strange drop yesterday and is also basically flatlining these last two days. GRZ has reacted with a shrug about the news that Rusoro (RML.v) only got around 1.6m shares tendered to its hostile offer. The RML.v bid has been extended through to Feb 19th. For sure it's started weakly, but the RML.v offer is still on the table and no doubt there's a lot more story to tell yet. As mentioned previously, I own a few (not many) GRZ as a short-term takeover flip play.

Mag Silver (MVG) (MAG.to) up 3.6% at U$5.45. I still say that MVG is on a road to nowhere, Fresnillo is the only buyer in town and there's no reason why we can expect either a counterbid or an improved FRES.L offer. All that said, my thoughts from a few days ago to "take the bonus money and run" have been proved 100% wrong. The stock is up another 10% or so since then (though volumes remain low). Hell, sometimes I'm wrong about things. Big deal.

So why do I love this report so much? Well, I could dwell on that fact that the content is false and misleading. I could chortle a lot about that "no risk" quote. Or I could even talk about Andrew Beatty of Reuters who has a suspicious track record of pumping PTQ.to and is either lazy, incompetent or on the take (whatever way, he's a poor excuse for a journo and Reuters should be ashamed).

But the REAL REASON to adore and worship this report is the filing date, Wednesday 28th November 2007. Yep, the "no risk January" mentioned in the report refers to January 2008! Here we are over a year later and the company is still lying and cheating its shareholders and the wider investment community. And while we're at it, let's have an example of PTQ.to deeds (for that is how thou shalt know them). Here's a photo from 2005 of the Molejon site.

It was taken by Panama's environmental people ANAM to show the illegal and non-permitted logging that was going on at the site. PTQ had cleared about one hectare of jungle without asking and ANAM slapped a $10,000 fine on the company. Cut to 2008, and here's exactly the same area of jungle.

The company just kept on logging and clearing and now the exposed area is 20 to 30 times larger. Now does that look to you like a company that respects government authority and environmental rules and regulations, or does it look like a company that thinks it's above the law? And to get into context the barefaced cheek of these shits, PTQ.to is currently looking for legal loopholes and appeals to avoid paying the $1.93m fine that ANAM slapped on the company due to its continued illegal, anti-environmental activities.

That anti-mining groups hate Petaquilla Minerals is clear. However the point here is that pro-mining people should also hate PTQ.to and call the company out for what it is. It's companies like PTQ.to that give the whole industry a bad name and offer fuel to fire the illogical extremes of the anti-mining protest community. Not all miners are the same, and the majority that are socially and environmentally responsible should rise up, point their fingers at the PTQs of this world and run them out of town.

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